harley davidson india

Harley-Davidson NASDAQ: HOG

Harley-Davidson sales slowed as excess inventory piled up. HD has many 2016 models that remain in stock. The new 2017 models cannot be put on display until last year’s models sell. The additional inventory problem began in May 2016.

That problem continues now. Net income came in at $47.2 million, a 12 percent rise year over year.  Analysts expected $54.1 million. Earnings per share rang in at 27 cents, below analysts expectations.

Revenue dropped to $1.111 billion, less than last years’ $1.18 billion.

HD expects full-year motorcycle shipments to be flat or down. The company must sell last year’s models first before the 2017 models. This means HD does not need more inventory now. In addition, the motorcycle maker will ship up to 20 percent fewer motorcycles than during the 1st quarter of 2016.

Analysts expressed worry. Trevor Young, a Jeffries Equity Research analyst, told investors HD’s inability to sell current inventory will impact the motorcycle business.

In fact, all motorcycle companies reported lower sales. Lower consumer confidence and poorer economic performance in some states contributed. The industry discounted inventory to propped up sales.

Harley-Davidson officials worry economic and political uncertainty globally lowers spending for their products. Plus, HD’s most ardent fans may be aging; young riders may not replace the older fans.

But sales growth in the U.S. revealed a bright spot. Harley CEO Matt Levatich said: “Our long-term strategy is all about growing ridership in the U.S., growing reach and impact internationally.”

HD shipped over 262,000 vehicles in 2016, below 264,000 as expected. The U.S. is the company’s largest market. Sales in the U.S. flattened compared to 2015.

In addition, the U.S. president planned to go to a Harley factory. But these plans got cancelled. Furthermore, Harley officials feared protests related to the travel ban executive order.

The White House confirmed the U.S. President will not go to the Milwaukee factory. HD would only say that it did not have a scheduled visit from the President at any of its plants. Still, the company said three of the past five Presidents visited the plant.

“These visits are a testament to the pride and passion of our employees and their great work building Harley-Davidson motorcycles,” Maripat Blankenheim, director of Harley-Davidson’s corporate communication, said in a statement.

Neverthless, the White House Press Secretary said the President wants to meet with Harley executives.

Possible Harley-Davidson Recall

In other news: Some suspect Harley may enact a recall. The Motley Fool reports HD shut down one of its large plants. HD closed its plant in York, Penn. in the U.S. The company refused to disclose the reason behind the move. Harley makes CVO, Trike, Touring, and Sotftail models. Other parts are made there too.

The plant had 100 layoffs at the plant last year. The layoffs showed sales slid.

Nevertheless, the plant came back online quickly. Local news stations reported the plant closed due to a ‘”critical malfunction of a clutch assembly.” MF suspects the closure might lead to clutch recalls. And this was not the first time Harley recalled clutches. This would be the third recall in as many years.

Source: USAToday

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